Downsizing in San Francisco:

A Complete Guide for Empty Nesters & Retirees

Considering downsizing your home in San Francisco? You are not alone. Many longtime residents of San Francisco find themselves mulling a move to a smaller, more manageable home, especially after children have moved out or retirement is on the horizon.

In this post, we'll answer your questions about downsizing in San Francisco—including downsizing pros and cons, Prop 19 and property tax considerations, and the process of selling and buying your home. We'll also present you with important questions to ask yourself as you consider your next steps.

The Benefits of Downsizing in San Francisco

San Francisco is a highly sought-after city, known (among other things!) for its diverse neighborhoods, iconic architecture, walkable communities, and vibrant cultural scene. But as life circumstances change, exploring the San Francisco real estate market in search of a smaller property—whether within the city or elsewhere—can offer numerous advantages:

Reduced maintenance: A smaller property means less upkeep, giving you more time to enjoy city amenities like parks, local cafes, and neighborhood shopping districts.

Lower utility costs: Heating and powering a smaller space typically costs less each month—particularly significant in older San Francisco homes that can be expensive to maintain.

Potential financial windfall: With San Francisco's consistently strong property values, longtime homeowners often have substantial equity that can support retirement or other life goals.

Simplified lifestyle: Less space often leads to less clutter and more intentional living, allowing you to focus on what truly matters.

In San Francisco, downsizing doesn’t have to mean leaving the city you love. The city offers diverse housing options—from smaller single-family homes to condominiums and townhomes—allowing you to maintain your community connections while right-sizing your living space.

Understanding Prop 19 and Property Tax Benefits

One of the historical challenges to downsizing in California has been the potential property tax increase. Before 2021, many San Francisco homeowners felt trapped in homes that no longer suited their needs because moving would mean facing significantly higher property taxes.

Enter Proposition 19, which took effect on April 1, 2021. This important legislation allows eligible homeowners to:

• Transfer your original Prop 13 tax base to a new home anywhere in California

• Purchase a property of equal or lesser value while maintaining your current tax rate

• Even when buying a more expensive home, secure an adjusted tax rate based on your Prop 13 tax base

• Do this up to three times in your lifetime

To qualify for these benefits, you must be:

• Age 55 or older

• Severely disabled, or

• A victim of wildfire or natural disaster

For many San Francisco empty nesters, this means you can now downsize to a condo, townhome, or smaller residence—or even relocate elsewhere in California—without the property tax penalty that previously made such moves financially unfeasible.

Right-Sizing vs. Downsizing: What's Best for San Francisco Residents?

While downsizing offers clear advantages for many, it’s not the universal answer for every San Francisco homeowner. In fact, many residents choose to stay in their larger homes for good reasons:

Family gatherings: Hosting adult children and grandchildren often requires space, especially for holidays and celebrations.

Emotional attachment: Your San Francisco home may hold decades of memories, from first steps to graduations. These sentimental ties matter.

Home office or hobby space: With San Francisco’s strong remote work culture, maintaining extra space for work or creative pursuits can make sense.

Instead of downsizing, consider right-sizing your current San Francisco home:

• Repurpose unused bedrooms into spaces that serve your current lifestyle

• Consider adding an Accessory Dwelling Unit (ADU) for rental income or future caregiver needs

• Update kitchens and bathrooms to improve functionality and accessibility

As San Francisco real estate agents, we can help you evaluate whether staying put or moving to a smaller home makes the most sense for your situation.

Avoiding Common Mistakes with Prop 19 Applications

If you decide that downsizing is right for you, be careful not to miss out on Prop 19 benefits due to application errors. Recent data shows that approximately 44% of Prop 19 applications statewide are denied.

Common reasons include:

• Improper filing of paperwork

• Failure to complete the homeowner’s exemption form

• The property not qualifying as the applicant’s primary residence

To improve your chances of approval:

• Work with professionals familiar with Prop 19 requirements

• Ensure the homeowner’s exemption is claimed on your new property

• Only apply if you intend to make the new property your primary residence

• Keep all documentation organized and accessible

These tax transfers are tracked by Social Security number, so accuracy is essential.

Steps to Successfully Downsize in San Francisco

When you're ready to make your move, follow these steps for a smoother transition:

1. Assess your current and future needs
Consider how much space you truly need, preferred locations within San Francisco or beyond, and must-have features like single-level living or proximity to public transportation.

2. Get your finances in order
Understand your home’s current value, capital gains considerations, and how Prop 19 may affect your taxes. When you're ready to sell your San Francisco home, we can provide a detailed market analysis.

3. Start decluttering early
Begin downsizing possessions well before listing your home. Decide what to keep, donate, sell, or gift.

4. Explore your options
Different neighborhoods and housing types offer different lifestyles. Exploring your options helps you make a confident decision.

5. Work with experienced real estate professionals
Partner with agents who understand both the San Francisco market and the needs of downsizing homeowners.

6. Time your move strategically
When possible, coordinating the sale and purchase back-to-back can reduce stress and minimize temporary housing costs.

Maximizing Your Downsizing Experience in San Francisco

Downsizing in San Francisco offers a powerful opportunity to simplify your life while potentially strengthening your financial future. With Prop 19, eligible homeowners have more flexibility than ever to move without significant tax penalties.

As experienced San Francisco Realtors with deep local knowledge, we’re here to guide you through every step—from tax considerations to finding the right next home for your lifestyle.

Ready to explore your downsizing options in San Francisco?
Contact us today for a personalized consultation and let’s determine whether downsizing is the right move for your next chapter.